SCB believes key interest rate will go no lower than 2.75%

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BANGKOK, 4 April 2013 Economic Intelligence Center of Siam Commercial Bank (EIC) said the reason for the Bank of Thailand (BoT) to maintain the policy interest rate at 2.75% was due to positive factors such as economic growth and the government investments. 

According to the EIC, the Monetary Policy Committee’s vote of 5 to 1 to retain the benchmark interest rate at 2.75% could have been influenced by domestic spending and positive assumptions that the government’s water management and infrastructure development projects have the potential to attract investments from the private sector.

However, the EIC has cautioned that it is important to apply a lenient fiscal policy as risks are still imminent in the global economy particularly the continual recession in Europe which could have negative impacts on Thai exports as well as the industrial sector. The EIC has also forecasted that the Monetary Policy Committee will continue to maintain the rate for the rest of the year given how well the economy is doing and the rise in household and business credits. Chances for the Committee to lower the rate are slim, according to the EIC, because of the stronger baht and the influx of foreign capitals.